Stimulus 3.0: Construction, infra firms on concrete road to recovery

Recent policy measures on liquidity add to improving outlook led by better execution, good order flows, and low interest rates

The government’s stimulus 3.0 is expected to strengthen the already improving prospects of construction and infrastructure players. These announcements will lead to higher liquidity and lower working capital requirement for construction firms, say analysts. 

Among major initiatives, entities are likely to gain from the relaxation in performance security (reduced from 5-10 per cent to 3 per cent) for both existing and new contracts — from the Centre and public sector enterprises — leading to lower working capital needs. Contractors will benefit more, if states follow suit. Funding requirement will also ease owing to the reduction/removal of earnest money deposit for new